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Everyone who is shopping around for an insurance policy wants to pay less but gain more coverage. While there are a few strategies through which this can be achieved, the one strategy that is most popular is Usage based insurance [UBI] or telematics. In a survey done among the insurers/agents in 2019, nearly 74% of participants believed the Internet of Things [IOT] would definitely disrupt the insurance industry by 2020, which today has become a reality.
What telematics does is it brings together the capabilities of telecommunication and information technology to offer better insurance related products and services to the customers. While earlier auto insurance was just focussed on the vehicle, it has now shifted to the drivers, and their behaviour patterns, including the vehicle condition, and other factors.
Telematics uses a wireless device that is placed in the vehicle to monitor and report real time back to the insures data pertaining to:
Another study has discovered that the customer demands from Usage Based Insurance (UBI) and insurance telematics have been constantly changing. This market is expected to grow to over 140 million subscribers [across the globe] by 2023 and reach a CAGR of 20.7% in the next 5 years.
The image below showcases customer experience tech for insurance across functionalities.
Over the last few years, the OEM solutions have caught up and today the vehicle manufacturers are rolling out these technology-based solutions preinstalled in all vehicles. This is likely to open venues and opportunities for insurers to offer better customer experience and flexible pricing as well.
Some of the early adopters of Telematics/UBI have seen the difference it makes and the insights offered that gives them an edge over competition. Moving away from traditional methods of capturing and analyzing data, today insurers are relying on Big data & Data analytics to provide them valuable insights. This has left the others who are yet to catch up in a dicey situation, wondering if they should adopt these technologies or wait. The trailblazers have been able to rapidly collect huge volumes of data that is analyzed by the automated systems in place. The output helps insurers to study and evaluate the customers and becomes the base greater precision in underwriting services and product pricing.
We had written earlier about the key role-played by telematics in claims and underwriting, but in this data driven age, insurance companies of all kinds need to leverage on this strategic solution to respond to the emerging markets.
With the steady increase in use of connected vehicles and wearables, which are directly connected to V2X (vehicle to an external IoT device), there is constant engagement and data exchange between the two. It is therefore essential to use the captured data, analyse it using the AI capabilities and transform the business of insurance.
Insurance leaders who are looking to include UBI as part of their product line need to start by having an open conversation with the customers on how it will change their lives, and explain the advantages of monitoring their driving and behaviour patterns. In order to retain the UBI customers, insurers need to also show the customers the gains they can enjoy, and how it is different from what the competitor offers- lower premiums, personalized products and so on.
For quite a few customers, mention of discounted premium is motivation to try new solutions. As UBI moves ahead from its nascent stage, insurance telematics offers the opportunity to create an entirely new system of engagement and enhances customer experience.
The questions to ask yourself before granting permission to your insurer are:
At Neutrinos, with our insightful and incisive approach, we ensure that clients are able to leverage the disruptive edge of technology. We offer in-built capabilities for the adoption of emerging and futuristic technologies such as IoT, AI, ML, and more. If you are looking for digital insurance solutions, connect with us now!